The Pai FCC Sits On Its Hands While Phone Companies Rip Off American Taxpayers

We've talked often about how the nation's phone companies, now fixated on video and online advertising, have effectively just been letting their DSL and phone networks fall apart while still charging exorbitant rates. Not only did these companies take billions in taxpayer dollars to build these older copper-based networks, they took billions more in subsidies for fiber upgrades they never fully deployed. Yet increasingly we've watched as they've refused to upgrade or even repair their networks across countless states, leaving customers trapped with expensive service that often doesn't even meet the FCC's standard definition of broadband (25 Mbps).

This problem has often been exemplified by Frontier Communications in West Virginia, where local Charleston Gazette reporter Eric Eyre has quietly done an amazing job the last few years chronicling the state's immense corruption and dysfunction, from the state's use of broadband stimulus subsidies on unused, overpowered routers and overpaid, redundant consultants, to state leaders' attempts to bury reports supporting allegations that Frontier engaged in systemic, statewide fraud on the taxpayer dime.

Though not quite as profound, similar problems have plagued Frontier's operations in the state of Minnesota. The Minnesota Attorney General's office has been investigating whether Frontier violated state consumer-protection laws for a while now, and not long ago issued a 133 page report (pdf) detailing how terrible the company is at maintaining and repairing its network despite endless taxpayer subsidies. The report clearly illustrated a pattern of the company letting outages go on for months at a time, often putting paying customers at risk:

"The findings of this investigation detail an extraordinary situation, where customers have suffered with outages of months, or more, when the law requires telephone utilities to make all reasonable efforts to prevent interruptions of service. When interruptions occur, telephone utilities are to restore service "with the shortest possible delay." Frontier customers with these outages include those with family members with urgent medical needs, such as pacemakers monitored by their medical teams via the customer's landline."

Given that Frontier receives $283.4 million each year from the FCC's Connect America Fund (CAF), there's some obvious questions here as to who is minding the store and ensuring that Frontier is adhering to the law.

Like most broadband dysfunction, giant broadband ISPs get away with this sort of thing thanks to two things: a lack of real broadband competition, and regulatory capture. Case in point: Ajit Pai, whose FCC is supposed at least occasionally protect the American public. Senators in Minnesota have recently been pressing him to take some kind of action, even to publicly condemn the kind of grift and consumer mistreatment that's pretty common in the the state. In a letter posted to the FCC website (pdf), Pai effectively acknowledged the problem, though falls well short of saying he'll actually do anything about it:

"...the FCC will remain vigilant to ensure that our rules are observed and taxpayer funds respected. Accordingly, I have conveyed the information from your letter regarding the state commission's investigation to our staff and have asked them carefully to monitor this development. Thank you for bringing this aspect of the issue to my attention."

While Pai is just a particularly obvious example of the regulatory capture that has infected telecom, this kind of "maybe we'll look into it" attitude has plagued both parties for decades when it comes to big telecom's long history of taxpayer-supported shenanigans and overall apathy. Needless to say, local state Senators weren't particularly enthusiastic about Pai's promise, especially given Pai's often breathless claims that he's a champion of stopping fraud and waste:

"For a chairman who is so concerned with rooting out waste, fraud and abuse, it's baffling that the commission tasked with overseeing billions of dollars in public money is declining to investigate the more than a thousand allegations of poor service by a company that receives that public money to provide those services," US Sen. Tina Smith (D-Minn.) told Ars in a statement today."

Given this is America, this will likely just be dismissed as partisan bickering. But it shouldn't be. We've thrown endless billions in taxpayer dollars at giant telecom conglomerates with often just a fleeting effort to ensure that money is being spent wisely. And while it's nice the Pai FCC will "monitor" the problem, we're long past that point. If you dig for more than twenty seconds, you can find endless examples of giant ISPs taking taxpayer dollars in exchange for the technological equivalent of damp garbage. And were Pai a quarter of the stalwart defender of fraud and waste he professes to be, this stuff would be met with a lot more than just "we might look into it."